S&OP as a Driving Force for Sustainability of Change and Business Transformation

Sales and Operations Planning Conference
Amsterdam, 2010/03/11
S&OP as a Driving Force for Sustainability
of Change and Business Transformation

Amsterdam Supply Planning Conference –
Planning at CCE AG 2009-01-29 v0.2.ppt
Seite 2
Success Factor Franchise System
The Coca-Cola Company (TCCC)
• Located in Atlanta, Georgia, USA
• Franchiser
• Brand and Trandmark owner of more than 400 beverage
brands
• Responsible for Brand, Product and Package development
• Supplier of beverage base / concentrate
Division/Region
• Represents TCCC in each country /
region
• Franchiser
• „Protects the bands“
• Develops and runs national
marketing programs
• Product and Package development
Regional Bottling Partners
• Holds bottler contract with TCCC
• Franchisee
• Right to produce TCCC Product and
Packages
• Sells in a defined area
• Independent Company
• Marketing / Communication

Seite 3
Structure of the German Coca-Cola organization
Coca-Cola GmbH–
German division of TCCC
Coca-Cola Erfrischungsgetränke –
German Bottler
• Founded 1929 in Essen
• National marketing programs and
strategies
• Product and package development
• Bottling
• distribution
• sales & regional marketing

Seite 4
NESTEA ist eine Schutzmarke der Sociéte des Produits Nestlé S.A. (Schweiz).
• More than 450 brands worldwide with
around 2,800 products
• Germany: Over 20 brands with over 70
products in all nonalcoholic beverage
categories
• Package portfolio designed to meet
requirements from 200 ml for immediate
consumption to the 2.25-liter family package
Products in all nonalcoholic beverage segments

Seite 5
200 ml refillable
glass contour
bottle
330 ml
nonrefillable
PET bottle
500 ml
refillable
PET bottle
1.0 l
refillable PET
bottle
1.5 l
refillable PET
bottle
500 ml
refillable glass
bottle
330 ml
refillable
glass bottle
1.25 l
nonrefillable
PET bottle
500 ml non-
refillable
sports bottle
1.0 l non-
refillable
PET bottle
330 ml can 1.5 l non-
refillable
Pet bottle
500 ml non-
refillable
Tetra Pack
500 ml nonrefillable
PET bottle
Tailor-made package portfolio
0.7 l
refillable glass
bottle
2.0 l
nonrefillable
PET bottle

Seite 6
towards a
total beverage company
focus
Customer First

Seite 7
German Customer, Sales, Production and
Distribution landscape
 130 tsd. Customer Ship To’s
serviced by
 One national sales company
(National Key Accounts) and
 10 Sales Centers
with
 500+ SKU’s
 350 mil ph. Cases shipped
from
60 warehouses and
25 plants with 73 production lines

Seite 8
Agenda
S&OP as a Driving Force for Sustainability of Change and
Business Transformation
 Differentiating and integrating strategic, tactical and operational planning
 Key prerequisites (process, people, technology) and the impact on
organization
 Deployment strategies and options
 Multi-level organization requiring national, regional and local S&OP routines
 Critical success factors to ensure sustainability and ongoing improvements

Seite 9
Integrated Demand & Supply Planning – Why?
Streamline & ensure effectiveness of planning efforts between all functions
Marketing, Sales (national & local), Logistics, Production, Purchasing & Finance
Work with „One set of numbers“ for volume planning
Improve Customer Service
• Higher product availability
• Perfect Order ( DIFOTAI )
• Improved response time
• Increase visibility of resource
requirements
• Proactive customer
management
We want to
Gain Economic Impact
• Reduced Capital Need
… Cost
• Reduced OOS
• Reduced Write Offs
• Reduced Freight Cost
• Less Warehouse space
needed
We expect to
Enable CCEAG to handle
signif. increase of new SKU’s
• Innovations
eg. Juice, RTD Coffee, Glaceau, etc.
• Launches
• Customer specific SKU’s
• Promotions / Displays /
Secondary Placements
We need to

Seite 10
Strategic
1- 5 yrs
Sourcing Strategy
and Infrastructure
(Plants,Lines, Warehouses)
National / Regional
by Package Groups
Marketing – Sales –
Supply Chain –
Finance
Strategic, tactical and operational planning…
Operational
1 – 13 weeks
Inventory-,
Master Production-,
Transportation- and
Material-Planning
Nat. – reg. – local
by all SKU’s
Supply Chain –
Finance
Tactical
3 – 12 months
Sourcing Matrix
(Which articles produced
on which line for which
warehouse and which
customers)
by Main Packages
Supply Chain –
Finance
Horizon
Main Target
Details
Participation

Seite 11
Strategic
1- 5 yrs
Sourcing Strategy
and Infrastructure
(Plants,Lines, Warehouses)
National / Regional
by Package Groups
Supply Chain –
Finance
Operational
1 – 13 weeks
Inventory-,
Master Production-,
Transportation- and
Material-Planning
by all SKU’s
Supply Chain –
Finance
Tactical
3 – 12 months
Sourcing Matrix
(Which articles produced
on which line for which
warehouse and which
customers)
by Main Packages
Supply Chain –
Finance
Horizon
Main Target
Details
Participation
… integrated by Sales & Operations Meeting
Routines …
Sales & Operations Meeting Routines

Seite 12
Demand
Planning
Supply
Planning
regional
weekly
regional
monthly
National
monthly
Reduced OOS / ensure availability ++ ++ ++ ++ ++
Reduced Inventory level ++ ++ ++ +
Reduced Write Offs ++ + + ++
Freight Cost - reduced matrix dev. + ++ ++ +
Production: optimized Lot Size + ++ ++ +
Impact of
on
Processes Sales & Operation Pl. Routines
Basic
function
Advance
d tool
(+) ++
+ ++
+ ++
(+) ++
(+) ++
Tool
… are driving customer satisfaction and
economic value !!!
++ Significant Impact
+ Certain Impact
Neutral
• Aligned and effective launches / innovations
• Ability to run large promotions effectively
• Increased visibility of resource requirements
Proactive customer management
++ ++ ++

Seite 13
Agenda
organization

Seite 14
The three Pillars for Success
Processes People Technology
Organization

Seite 15
Organization
Robust processes are the main prerequisite …
• Processes need to be aligned with operational business needs
• Review of best practice, internal and external benchmarks
• Align to one standard for the entire organization (functional as well as
national-regional-local)
• Agree to clear definition of - Planning Process
- S&OP Meeting routines
- KBI’s
• Document on different levels of detail

Seite 16
Organization
… but the right people are also needed …
• People are key:
• get the right skill set and
• achieve sufficient motivation
• Training, training, training of
• Planners and
• Management
Good understanding of value drivers, standard processes and tools

Seite 17
Organization
… supported by adequate tools …
• Systems need to support and meet operational business needs
• Start with intermediate tools – introduce advanced planning tools later
• Ensure
• Master Data are clean
• Transparency is available
• Methods and logic are understood
• Statistical methods provide additional value
• KBI’s are accurate, flexible and timely available

Seite 18
Organization
… and based on the appropriate organization
• Define clear, understandable role-sort:
• National – Regional – Local
• Funding of resources needed
• Cross-functional alignment
• Reporting lines – matrix management
• Get commitment of management to actively participate in S&OP meeting
routines

Seite 19
Agenda
organization

Seite 20
Demand & Supply Planning elements …
Financial
Planning
(RE)
New
Procucts/
Packages
Demand Planning
and Forecast
per SKU /
Customer/ Channel
=> per Warehouse
Material
Planning
Detailled
Production
Planning
Demand Planning Supply Planning
Sales & Operations Planning Routine
local – regional – national
Production-
execution
Execution:
Dispatching / Transport
Distribution
Customer
Master
Production Pl.
per SKU & Line
Master Transport Planning
Inventory Pl.
per SKU &
Warehouse
Planning
Planning vs. Execution
Execution

Seite 21
… can be implemented in different approaches
Functional Scope
all elements element by
at once element
or
certain set
of elements
• Complexity of processes in place
• Benefits to gain
• Interests of stakeholders
• Resources available
Regional Scope
across the location by
whole org. location
or
region by
region
• Complexity / diversity of regions
• Resources available (project/planners/
cosutltancy)
• Expected speed of implementation
Need to be combined in a pragmatic manner!

Seite 22
Agenda
organization

Seite 23Page 23 Confidential
Implement integrated Demand- & Supply Planning
processes (process, people & technology) across Germany
Supply
Planning
Demand
Planning
SupplyDemand
Business
Strategy
Sales & Operations
Planning
Execution
Monitoring
Demand, Operations & Inventory Planning …

Seite 24
… supported by S&OP Meeting Routines
National 24 Plants - strategic planning (plants/lines/whs.) Senior Management
level 60 Whs.’s - inventory guidelines Marketing – Sales – Supply
- sourcing matrix Chain – Finance
- (de-) launches / new products
- toll filling and import / export
- review KBI’s
Regional 4-7 Plants - inventory planning
level 10-15 Whs.’s - master production planning Regional Management
- master transport planning Sales – Logistics –
- material planning Production – Finance
- review KBI’s
Local Plant/Whs. - Execution
level - Detailed scheduling &
Production Local Management
- Inventory management & control
- Transportation management
Guidance
Support Escalation
of issues
Guidance
Support Escalation
of issues
Level Scope Content Participants

Seite 25
Agenda
organization

Seite 26
1. Ensure consistent support of (Top)
Management Support
2. Keep all stakeholders informed
3. Create sense of urgency
4. Build Business Case – Benefits for all
involved parties (Customer -Sales –
Logistics – Production – Financials)
5. Compose Project Team incl.
Operational Staff
6. Define KBI’s and track continuously
Critical Success Factors - Lessons learned
Always keep in mind – it is a Journey
7. Define and align deployment strategy
8. Build “Show Case”
9. Focus on process definition and
people (training, training, training)
10.Ensure access to solid, reliable base
data for planning and a
understandable tool for support
11.Define the path to get and build
advanced planning system
12.Regular Review
The 12 Factors

S&OP as a Driving Force for Sustainability of Change and Business Transformation

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